RBA screams ‘slash immigration’ at Albo


The RBA has taken up the MB baton!

Recent data indicate that the upside risks to the inflation outlook have increased and the Board has responded to this. While goods price inflation is slowing, services price inflation is still very high and is proving to be very persistent overseas. Unit labour costs are also rising briskly, with productivity growth remaining subdued.

Growth in the Australian economy has slowed and conditions in the labour market have eased, although they remain very tight. The unemployment rate increased slightly to 3.7 per cent in April and employment growth has moderated. Firms report that labour shortages have eased, although job vacancies and advertisements are still at very high levels.

Wages growth has picked up in response to the tight labour market and high inflation. Growth in public sector wages is expected to pick up further and the annual increase in award wages was higher than it was last year. At the aggregate level, wages growth is still consistent with the inflation target, provided that productivity growth picks up.

The Board remains alert to the risk that expectations of ongoing high inflation contribute to larger increases in both prices and wages, especially given the limited spare capacity in the economy and the still very low rate of unemployment. Accordingly, it will continue to pay close attention to both the evolution of labour costs and the price-setting behaviour of firms.

In short, the RBA is raising interest rates now because it fears wage rises without productivity growth are inflationary.

What does the bank say about productivity? It told us just last week:

“The amount of capital that on average we have to work with is one of the drivers of productivity growth.”

“We do need to increase the capital stock in line with the number of people in the country and that requires high levels of investment. And if we don’t do that, then we’re going to struggle”.

“If we’re going to have 2% more people in the country, we need 2% more capital, and that requires investment by business and investment by government”.


“Solving the housing problem, I think that’s the single biggest thing we could do. And then we’ve got to build the transportation infrastructure to support that.”

“Are there 2% more houses? No”.

This is called capital shallowing. As the RBA suggests, it happens when you forcibly grow your population without a plan to accommodate it.

We saw this phenomenon across the last cycle as cheap foreign labour displaced investment and automation. Now we have less capacity on the supply side owing to COVID stimulus, and the RBA is clearly concerned the shallowing is driving inflation in areas like housing, business investment and energy.


In short, the RBA is now hiking rates as a direct attack on Albo’s mismanaged mass immigration program.

This exposes how ideologically corrupt Albo’s plan is to deliberately run mass immigration into supply-side bottlenecks in order to inflate rents and house prices for vested interests.

I agree with Jim “Chicken” Chalmers when he says “It’s for the Reserve Bank and its board in the usual way to explain and defend the decisions that it takes independently but I think out there, in the community, people who are under pressure, will find this decision hard to cop and they will need help understanding it.”


The RBA should spell it out. Something along the lines of: ‘The Albanese Government has no plan to accommodate its lunatic mass immigration wave and we are forced to hike rates as a result.’

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.